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China's economy set to face bumps from various tests(2008/07/16)
The Yangtze Delta and Pearl Delta regions have shown signs of an economic slowdown and some economists said China's economy may face a bumpy road because of various challenges.
They made their comments before China is set to release economic data for the first half of the year on Thursday.
Hu Chunli, a researcher with the State Information Center, said the advantages of low labor and raw material costs were disappearing in China's coastal cities and this erosion made it harder for businesses there to grow.
Export-oriented firms in these cities suffered more from the appreciation of the yuan.
According to the latest data released by the National Development and Reform Commission, China's eastern areas grew 15.71 percent from January to May, the lowest compared to the western, northeastern and the middle regions of China's mainland.
The growth of the eastern areas also posted the sharpest slowdown of all the regions, with the pace moderating 3.1 percentage points from a year earlier.
Meanwhile, Hu said tight credit control prevented small and medium-sized companies from getting finance for further development.
Yu Bin, director of the macroeconomic research department of the Development Research Center under the State Council, said the United States credit crisis, natural disasters, the unstable performance of China's securities and real estate markets as well as the surging costs of production, made it possible that the nation's economy may experience a sharp slowdown this year.
"Considering the combination of all these factors, China's economy may face a sharp slowdown. It may feel like a sudden braking and the engine may not be easy to restart," the National Business Daily said yesterday, quoting Yu speaking at a forum in Beijing.
China's economic growth will likely moderate to 9.8 percent in 2008 from last year's 11.9 percent, the World Bank predicted in its latest China Quarterly Update last month.
But the World Bank was generally positive about China's economy as real growth of exports and imports remained robust despite economic activity in the country moderating in line with the global economy's slowdown.
In the first half of the year, China's trade surplus reached 99 billion U.S. dollars, a decline of 11.8 percent from a year ago as export growth slowed while imports expanded faster.
(Source: Shanghai Daily)

Officials: China should strive for bigger voice in global economy(2008/07/15)
(Xinhua) -- Wan Jifei, president of China Chamber of International Commerce said on Wednesday that the country needs to participate in the formulation of global economic and trade rules apart from taking part in international division of labor and competition.
Wan, also chairman of the China Council for the Promotion of International Trade, said at a chamber meeting that with Chinese companies getting stronger capabilities and the country having increasing influence globally, to get a bigger voice is conducive to protecting the legitimate interests and rights of domestic enterprises.
Zhang Yanling, vice president of the Bank of China, said China is engaged closely with foreign countries economically and the scale of trade and labor service export is keeping on growing.
Zhang added that Chinese companies should not only be familiar with existing international rules, but should also play an active role in setting up these rules and voice their opinions in international economic arena.

FDI in China up 45.6% in Jan-June period(2008/07/14)
Foreign direct investment (FDI) in China rose 45.6 percent in the first half of 2008 from a year earlier, as overseas investors continued to bank on the business opportunities in the world's fastest growing major economy. The FDI amounted to 52.4 billion U.S. dollars during the six months to June, the Ministry of Commerce said on Friday.
The surge was attributed to the country's robust economic growth and stronger yuan, analysts said. Others factors include the sluggish U.S. economic growth and declining dollar.
China's economy expanded 10.6 percent year on year, in the first quarter. The yuan gained 6.5 percent against the U.S. dollar in the first half.
The number of newly-approved foreign-funded companies totaled 14,544, down 22.2 percent from the same period last year, the ministry added.
China's forex regulator has urged greater supervision over the inflows of short-term global speculative funds as a large-scale capital flight on rising dollar could undermine the economy and financial security.
Analysts believed that tens of billions of dollars of "hot money" has entered the country in the guise of trade and investment so far this year.
Exports increased 21.9 percent year-on-year to 666.6 billion U.S. dollars in the first half, while imports rose 30.6 percent to567.57 billion U.S. dollars, the General Administration of Customs said on Thursday.

Report: China CPI to rise 7.2% in 2008（2008/07/14）
BEIJING, July 10 (Xinhua) -- China's consumer price index (CPI),the main gauge of inflation, is expected to rise 7.2 percent year on year in 2008, according to a Bank of China (BOC) report on Wednesday.
The report, released by the lender's global financial market department, suggested the central government adopt more tightening monetary policies to further tame inflation, drain liquidity and curb excessive investment.
China had been under inflationary pressure this year as the CPI increased 7.7 percent in May from the same month last year. The figure was 8.5 percent in April, up from 8.3 percent in March and near the 12-year high of 8.7 percent in February.
The producer price index, another measure of inflation, accelerated to 8.2 percent in May after gaining 8.1 percent in April, according to the National Bureau of Statistics.
The BOC predicted in an earlier report CPI in 2008 would increase 6.8 percent year on year. However, the report said "Rising prices of gasoline, coal oil and electricity will push up the previously estimated figure."
China's National Development and Reform Commission had raised the price of refined oil by 1,000 yuan per tonne as of June 20.
The report advised the government raise interest rates and reinin appreciation of the yuan, the country's currency. China was very likely to raise interest rates in the fourth quarter, it said.
The central parity rate of the yuan, or renminbi (RMB), was set at 6.8489 yuan on Thursday against the U.S. dollar, since the country un-pegged its currency from the greenback in July 2005.
The yuan has risen more than 6.65 percent against the U.S. dollar so far this year, in comparison with the 6.9 percent gain last year, and has broken its own record value 52 times.
"A slower appreciation in the currency will help to make full use of the domestic labor force, which is China's most sufficient resource," the report explained.
It also forecast inflation might show a deceleration in June as food, vegetables and fruit prices dropped. The CPI was expected to rise 7.3 percent in June year on year.

China's consumer confidence index shrinks in Q2（2008/07/10）
(Xinhua) -- China's consumer confidence index dropped in the second quarter, reflecting an expected cool down in the country's economy.
The index fell 0.7 percentage points from the previous quarter to 94.1, said the National Bureau of Statistics (NBS) on Wednesday.
The index was also 2.7 percentage points lower than in the same period last year.
The Index, which measures consumers' outlook toward employment, the economy, regular income, stock market and quality of life, was released following the disclosure of a slightly lower entrepreneurial confidence index and a lower business climate index, both year-on-year figures for the second quarter.
China's business climate index dropped 8.6 points to 137.4 points from last year's second quarter, while the entrepreneurial confidence index dipped 8.3 points to 134.8 from the same period last year.

Chinese entrepreneurs less confident in Q2(2008/07/09)
BEIJING, July 8 (Xinhua) -- China's entrepreneur confidence index dipped 8.3 points to 134.8 in the second quarter from the same period last year, said the National Bureau of Statistics on Tuesday.
The index, a gauge of the understanding, views and projections of entrepreneurs, was 5.8 points lower than that in the first quarter.
"The entrepreneurs' weaker confidence mirrors the current macro-economic condition, as growth is slowing down," said Guosen Securities analyst Lin Songli. "It also shows their anticipation of future developments."
The figure followed Monday's release of China's business climate index, a key gauge of corporate performance, which dropped8.6 points to 137.4 points in the second quarter from the same 2007 period.
Deputy Director Cai Zhizhou of China Center for National Accounting and Economic Growth, Peking University, attributed the climate index drop to rising costs of land, labor and energy resources, plus tightened credit.
The value of China's exports in the first five months rose 22.9percent from the same period last year. The growth rate was 4.9 percentage points lower than that of the first five months of last year.
The growth rate of urban fixed-asset investment in January-May also fell 0.3 percentage points year on year.
Social service sectors, such as banking, insurance, water and power supply, saw the biggest slip in entrepreneur confidence in the second quarter. Lodging and eatery industries posted the second biggest slump.
Entrepreneurs in mining sectors were the most confident, with their index at 169 points, followed by the information and software businessmen.
Meanwhile, entrepreneurs in the real estate industry posted the lowest confidence index of 118.4 points.
Those in large-sized enterprises had more confidence than those in small and medium-sized ones, with the indices for them standing at 149.9, 125.3 and 118 points respectively.
The figures were based on a survey of 19,500 companies nationwide.

China's business climate index continues to drop in Q2(2008/07/08)
(Xinhua) -- China's business climate index, a key gauge of corporate performance, continued to drop year on year in the second quarter despite a slight recovery from the first quarter, Monday official figures showed.
The index, based on a survey of 19,500 Chinese firms, rose to 137.4 points in the second quarter from 136.2 in the first quarter, but 8.6 points down from last year's second quarter, said the National Bureau of Statistics.
Rising costs of land, labor and energy resources, accompanied by tightened credit, contributed to the index fall, said Deputy Director Cai Zhizhou of China Center for National Accounting and Economic Growth, Peking University.
"Pressured by higher costs and fund restraints, Chinese enterprises are going though a transition period," he said.
Cai said it was urgent for the enterprises to change the development mode relying on high energy and resource consumption.
Large-, medium- and small-sized enterprises all reported declining climate indices from last year's first quarter. Their second-quarter levels were 155.9, 125.3 and 115.7 points, respectively.
Information technology and software sectors continued to post a higher climate index, which rose 4.4 points to 162.9 from the same period last year.
Compared with the first quarter, industrial companies gained 2.4 points to 135.7, construction went up to 144.2 points, while the real estate stayed at almost the same level at 131.8 points.
Wholesale, retail, transport, hotel and eatery sectors all fell from the first quarter.
"The index was a natural reflection of the slower economic growth," said Cai.
China's gross domestic product in the first quarter rose 10.6 percent year-on-year, but the growth rate was 1.1 percentage lower than a year earlier.
The business climate index, with the 100-point mark as the mark between depression and prosperity, tumbled to 116.6 points, its lowest level since the outbreak of SARS in 2003. It has since stayed above 130.

Oil prices settle record above 145 U.S. dollars（2008/07/07）
NEW YORK, July 3 (Xinhua) -- Crude futures surged and settled above 145 U.S. dollars a barrel for the first time Thursday after a rising dollar did not ease much of the investors' concern about supplies.
Light, sweet crude for August delivery rose 1.72 dollars to settle at a new record of 145.29 dollars a barrel on the New York Mercantile Exchange. In the early morning electronic trading the contract hit an all-time peak of 145.85 dollars a barrel.
Oil's Thursday rally was believed to have been driven by Wednesday's report of a bigger-than-expected drop in the U.S. crude stockpiles and the lingering concerns about the tension in the Middle East.
But the price hike eased after the dollar gained strongly against the euro. The European Central Bank (ECB) raised interest rate by a quarter point on Thursday. As the decision was long expected by the market, and the ECB played down prospect of further rate increase, the euro fell sharply against the dollar.
In London, Brent crude for August delivery hit a record of 146.69 dollars a barrel before settling up 1.82 dollars at 146.08 dollars a barrel on the ICE Futures Exchange.

State firms seek global talent（2008/07/04）
BEIJING, July 3 -- China will start a new round of talent recruitment globally to find 16 senior managers and chief accountants for its elite State enterprises.
The State-owned Assets Supervision and Administration Commission (SASAC), which represents the State in more than 150 major State enterprises, will announce its recruitment plan next Tuesday.
The commission will look for three general managers, 10 deputy heads and three chief accountants for 16 major enterprises in a variety of sectors, such as power generation, electronics, chemical and trade. Some firms, such as Baoshan Iron and Steel Co, and FAW, China's top automaker, are among the world's top 500 enterprises.
The SASAC said it would establish overseas recruitment centers to save costs for applicants that it is looking to lure to China.
General managers are sought for the China Electronics Corporation, Harbin Power Equipment Corp and Macao-based Nam Kwong Group. It is the first time that the SASAC will openly recruit senior managers for Macao-based State enterprises.
Applicants must have at least a bachelor's degree and candidates applying for general manager roles must be under 50, the SASAC said. Only the "exceptionally competent" over-50s will be considered for these positions but even they must be under 53.
The SASAC started to openly recruit senior management for major State enterprises in 2003 and has hired 91 high-ranking managers since. "It (open recruitment) has created a sound environment for qualified managers to stand out," Li Rongrong, head of SASAC, said at a June 26 meeting.
"Such a way of recruitment will encourage competition and help improve management efficiency in State enterprises," said Han Meng, researcher with the Institute of Economics of the Chinese Academy of Social Sciences.
China's State enterprises used to be criticized for being slow to market changes - a legacy of the planned economy era. Top managers, many of whom appointed by higher authorities, are often thought as officials who lack some of the skills needed in corporate management.
But since China has adopted the market-based economy, the SASAC has tried to introduce modern corporate governance into State enterprises by helping them establish board of directors and supervisors and by making their managers more professional and better suited to manage the country's approximate 30 trillion yuan worth of State assets.
"The SASAC's recruitment process is open and market-based, which will be conducive for corporate governance," Han said.
The age limit for candidates points to the philosophy and commitment in seeking out young talent, which is a trend in China, he added.
The recruitment announcement will be published on the official website of SASAC, China Daily and other major media outlets. The application deadline is August 6.
(Source: China Daily)

China to raise prices of refined oil, electricity（2008/06/24）
(Xinhua) -- China's top economic planner announced Thursday night the country will raise the prices of gasoline, diesel oil, aviation kerosene and electricity, revealing an unprecedented broad plan to raise energy prices.
Beginning Friday, the benchmark gasoline and diesel oil retail prices will be marked up by 1,000 yuan (144.9 U.S. dollars) per tonne, with the price of aviation kerosene up by 1,500 yuan per tonne.
The prices of natural gas and liquefied petroleum gas, however, would be left unchanged, according to the National Development and Reform Commission (NDRC).
The benchmark retail prices of gasoline and diesel oil would be lifted to 6,980 yuan and 6,520 yuan per tonne, up more than 16 percent and 18 percent respectively.
The price rises also translate into mark-ups of 0.8 yuan and 0.92 yuan per liter, the measurement used at service stations in China, for gasoline and diesel oil respectively.
The commission said the oil price adjustment was made to ensure supplies in the country by diminishing the gap between continuously rising international crude prices, especially since February, and state-set domestic oil prices.
Crude oil price on the international market reached above 136 U.S. dollars per barrel on Wednesday, up more than 45 percent from the price when the country raised oil prices in November last year.
The government-controlled oil prices on domestic market should be blamed for a shortfall of supplies, as some refineries stopped or cut back on processing to avoid losses, said an unidentified NDRC official.
The commission said more subsidies would be offered to farmers, public transport, low-income families and taxi drivers to cushion the crunch of price rises.
For instance, farmers would get five yuan per mu (1/15 hectare)of farmland in extra subsidy; low-income families in cities would get an extra 15 yuan for each person every month starting from July, 10 yuan for such rural families.
The commission said fares for passenger travel by rail, urban and rural public transport and taxis would remain unchanged after the rise.
The official did not comment on the impact of oil price rises on the inflation rate, which eased to 7.7 percent in May. In April, it rose 8.5 percent after a 12-year high of 8.7 percent in February.
The commission also said the average electricity tariff will be raised by 2.5 cents per kwh starting from July 1, up 4.7 percent on average.
It said the price rise was made in response to rising costs of the country's power plants, including rising power-coal prices, increased costs on desulphuration facilities and investment in grid upgrading.
More than 80 percent of all the power generation companies suffered losses in the January-May period due to power-coal price rises.
Official statistics showed that power coal prices went up by more than 80 yuan per tonne in the past two years. The prices had gone up by 60 yuan since the beginning of the year.
The commission also announced the country would exercise temporary price intervention on power coal as of Dec. 31, and power coal prices are capped below the price on June 19.
The policy was adopted as the commission expected the power-coal price to rise further because of the gap between domestic and international prices and tight supplies.
The commission also said urban and rural residents and sectors of farming and fertilizer production, as well as the quake-hit provinces of Sichuan, Shaanxi and Gansu, will be exempt from the price rise.
Industrial and commercial undertakings, however, would only see limited impact, as power expenses usually account for a small portion of their total costs, it said.
"The price rise in electricity would not have a fundamental impact on the country's inflation rate," said the NDRC official.

Weakening dollar adds price pressure（2008/06/23）
BEIJING, June 19 -- A weakening dollar has contributed to China's inflationary pressure by pushing up commodity prices around the world, said the country's central bank governor.
Chinese policymakers need to learn from the lessons of U.S. subprime woes, said Zhou Xiaochuan, governor of the People's Bank of China, also a member of the Chinese delegation attending the two-day session of the Sino-US Strategic Economic Dialogue (SED) in Maryland.
The dialogue, headed by the U.S. Treasury Secretary Henry Paulson and Chinese Vice-Premier Wang Qishan, ended yesterday.
"Emerging economies are feeling the pinch (of rising prices)," he said at a news briefing in Annapolis, Maryland. "A weakening dollar may push up prices of commodities such as crude oil," which are major imports of China, he said.
The price of crude oil has on one occasion topped 135 dollars a barrel in recent trading sessions.
Raw-material prices have also been hovering at high levels since last year, putting pressure on China's factory-gate prices, which would in turn pass onto the consumer inflation zone.
In May, China's producer price index, which gauges factory-gate prices, rose 8.2 percent, the highest in more than three years, feeding concerns that although consumer inflation eased to 7.7 percent in May, down from 8.5 percent the previous month, it may rebound in the coming months.
The central bank yesterday set the mid-point of the yuan's exchange rate at 6.8823 against the dollar, marking a new historical high since China revalued the yuan by 2.1 percent to 8.11 per dollar in July, 2005. It has appreciated a further 17.84 percent since then.
The yuan has regained momentum of fast appreciation while it is strengthening in the non-deliverable forwards market.
Analysts said the yuan's strengthening would reduce pressure on China's "imported inflation", or inflation incurred by imports, but the effect has proved to be limited. Worse, it has started to push some domestic export-oriented enterprises to the wall.
The appreciation momentum of the yuan may not slow until the Olympic Games in August, said Liu Dongliang, currency analyst of the Shenzhen-based China Merchants Bank. "The post-Olympic trend is not clear yet."
Zhou also said China will learn from the U.S. financial woes triggered by its subprime problems.
Sovereign wealth fund
Finance Minister Xie Xuren, who was also attending the SED session, said the country's overseas investment through its 200 billion dollar sovereign wealth fund does not pose a threat to financial markets.
Xie said that the fund is not aimed at short-term speculation but long-term investments that should help the overall economy.
As the U.S. financial market is bogged down by the subprime crisis, the capital injection from investment by the world's major sovereign wealth funds has helped stabilize the market, but some U.S. politicians fear that such investment will pose a threat to U.S. financial security.

China's fixed asset investment up 25.6% in Jan-May(2008/06/18)
China's urban fixed-asset investment rose 25.6 percent to 4.0264 trillion yuan (575.2 billion U.S. dollars) in the first five months of 2008 compared to the same period a year earlier, the National Bureau of Statistics (NBS) said here Tuesday.

The growth figure was 0.3 percentage points lower from the same period last year, and 0.1 percentage points lower than the Jan-April period this year.

"The growth was broadly in line with market expectations and reflected the government's efforts to prevent the economy from getting overheated," said Hu Yanni, a CITIC Securities Research analyst.

Hu said the deadly May 12 quake in Sichuan Province would have a short-term negative impact on fixed-asset investment, while speeding up the investment pace in the long run with the surge in demand on infrastructure rebuilding and temporary settlement construction in the affected regions.

Li Daokui, a Tsinghua University economist, said the investment was not apparently overheated, but the government should be cautious as it was likely to rebound in the second half to add to inflationary pressures.

The NBS reported earlier this month that inflation, as measured by the consumer price index (CPI), was up 7.7 percent in May over the same month last year. In April, it rose 8.5 percent after a 12-year high of 8.7 percent in February.

Meanwhile, there were worries the CPI would accelerate because of rising factory-gate prices, analysts said.

The producer price index (PPI), which measures the value of finished products when they leave the factory, rose 8.2 percent inMay over the same month last year. The rise was 0.1 percentage points higher than April's 8.1 percent.

Investment in state-owned and state-controlled enterprises was 1.6397 trillion yuan, up 18 percent. Investment in the real estate sector grew 31.9 percent to 951.9 billion yuan, the NBS said.

Primary industry (farming, fishing, forestry and the like) continued to grow the fastest among industrial sectors, expanding 66.1 percent during the first five months. That compared with secondary and tertiary industries, whose investment rose 25.6 percent and 25 percent, respectively.

Zhang Xiaojing, a Chinese Academy of Social Sciences analyst, said the 71-percent surge in primary industry investment was a positive sign. It showed the government's move to shore up agricultural development was effective.

Investment by the central government expanded 18.5 percent year-on-year to 369.9 billion yuan and that by local governments was up 26.4 percent to 3.6566 trillion yuan.

The first five months saw the commencement of 84,368 projects, 9,667 more than the same period last year. Planned investment in these new projects was 2.721 trillion yuan, down 2.5 percent.

Fixed-asset investment is a main gauge of spending on new productive capacity and has been rising rapidly, fuelled by the ample liquidity in the country.

The government has taken a series of measures to drain liquidity as it tries to maintain a more sustainable economic growth and curb inflation.

In its latest effort to rein in credit growth, the central bank announced it would raise the reserve-requirement ratio for commercial banks by 1.0 percentage point in two stages this month to a new high of 17.5 percent.

China's inflation eases but prices to remain high（2008/06/17）
(Xinhua) -- China's inflation eased in May, a welcome trend that analysts said would continue for the rest of the year as food prices had started falling after surging over the past year.

The consumer price index (CPI), the main gauge of inflation, rose 7.7 percent last month, marking its first significant drop since last year, the National Bureau of Statistics (NBS) said on Thursday.

The CPI rose 8.5 percent in April, up from 8.3 in March and down from the 12-year high of 8.7 percent in February.

However, while inflation was decelerating, prices would remain high this year, and the situation might trigger further tightening and price reforms involving energy and resources, said analysts.

CPI TO DROP FURTHER

The CPI would continue to fall for the rest of the year with declining food prices, according to the China International Capital Corp. (CICC).

The rate of increase in food prices, a major driver behind China's high inflation, dropped 2.2 percentage points to 19.9 percent in May.

As stocks of live pigs and the yield of rape vegetables increased, the trend would likely to continue because of increasing supplies and an expected bumper harvest.

China has since last year introduced a series of incentives, including direct subsidies and government-funded insurance, to boost agricultural production.

Li Huiyong, an analyst with Shenyin Wanguo Securities, said that the devastating earthquake in Sichuan Province on May 12 had a limited impact on food prices as the grain and pork output in the quake regions accounted for a tiny portion of the nation's total.

Liang Hong, chief China economist with Goldman Sachs, said the easing in May might mark a start of prices softening during the remaining period of the year if the government stuck to tight monetary policies.

The People's Bank of China (PBOC), the central bank, ordered a full percentage point rise in the reserve requirement ratio on Saturday to enhance liquidity management and tame inflation. The larger-than-expected hike followed 14 increases in the reserve ratio and six interest rate hikes since last year.

This move dashed market hopes the PBOC would relax monetary policy as the economy faced a worrisome slowdown on weaker export growth and the impact of several crises, from the worst blizzards in five decades earlier this year to last month's 8.0-magnitude quake.

PRICES TO REMAIN HIGH

Inflation also eased because of the high base of comparison from late last year, but absolute prices would continue to climb all through the year, said Hu Yuexiao, an analyst with Shanghai Securities.

"The inflation situation is still very grim and the CPI is set to exceed the government target of 4.8 percent for 2008," said Hu.

The Bank of China (BOC) forecast the CPI will rise 8.3 percent in the second quarter and 6.8 percent the whole year.

The quake would not change economic fundamentals, but the massive investment required for reconstruction might add new inflationary pressures, the leading commercial bank said.

The acceleration in the producer price index (PPI) in May might lead to a rebound in the CPI sometime later this year as producers pass the higher costs on to consumers, analysts said.

The PPI surged 8.2 percent in May on higher costs of energy, resources and labor, after gaining 8.1 percent in April, the NBS said on Wednesday.

This also deepened worries that higher factory-gate prices might lead to more worrisome broad-based price rises, in contrast to the current structural hikes mainly caused by food.

"The pressures for broad-based price rises are still the biggest risk for the macro-economy," the central bank said in a report published early the month.

MORE TIGHTENING, PRICE CURBS?

Chinese authorities still needed to stick to a tight monetary policy and raise interest rates "at a proper time," following the reserve hike on Saturday, to more effectively curb inflation, the BOC said in a research report released on Tuesday.

Rate hikes would help to end negative interest rates to become one of the most effective weapons against inflation, the report noted.

The central bank, however, has refrained from boosting interest rates this year, fearing that could attract more overseas speculative funds after the sharp rate cuts in the United States.

With difficulty in reaching a consensus on rate hikes, the PBOC would use more bill sales, reserve ratio increases and administrative intervention to curb excess liquidity and inflation, the report added.

The trade surplus, although shrinking in recent months, continued to pump a huge amount of liquidity into the banking system, partly blamed for price surges.

To curb inflation and support post-quake building, the National Development and Reform Commission (NDRC), the top economic planning agency, ordered on Wednesday temporary price controls on construction materials such as steel, cement, timber and glass.

Earlier the year, the NDRC ordered similar steps for basic necessities ranging from grain, edible oils, meat, milk and eggs to liquefied petroleum gas.

The decelerating inflation might offer an opportunity for lifting some price controls, including raising fuel prices, in the second half of the year, CICC added.

Price controls have managed to limit the inflationary surge, but they were also widely said to have cut corporate profit growth or even caused losses and made businesses unwilling to increase output, which in turn fanned inflation.

China's producer price index up 8.2% in May(2008/06/12)
（Xinhua）-The producer price index (PPI) for China's industrial products rose 8.2 percent in May over the same month last year, the National Bureau of Statistics said Wednesday.
The PPI, which measures the value of finished products when they leave the factory, is 0.1 of a percentage point higher than May's 8.1 percent.
The factory-gate prices of raw materials, fuel and power were up 11.8 percent, also 0.1 of a percentage point higher than the previous month.
Experts said higher ex-factory prices could lead to a rising CPI, as producers might seek to pass on their rising costs to consumers.
China's CPI, a key measure of inflation, was up 8.5 percent in April, following an 8.3-percent rise in March and 8.7 percent in February, according to the NBS.
China has set an annual CPI target of 4.8 percent this year.
Factory-gate prices of crude oil surged 30.9 percent in May over the same period last year, while gasoline was up 11.0 percent, diesel 11.8 percent and kerosene 11.4 percent.
The producer prices of raw coal jumped 24.1 percent and those of steel products rose between 26.7 percent and 43.8 percent.
The purchasing prices, or costs, of fuel and power rose 21 percent, ferrous metals 22.1 percent, non-ferrous metals 3.4 percent and chemical raw materials 6.2 percent.
The PPI for manufactured goods was up 7.4 percent in the first five months of this year, while the costs of raw materials, fuel and power rose 10.6 percent.
The price index of food, a major component of the consumer price index (CPI), was up 11 percent, exceeding that for garments (2.4 percent) and daily commodities (3.9 percent). The prices of consumer durables were down 0.5 percent, said the NBS.

Official: China's economic growth probably to slow down（2008/06/11）
The Chinese economy might already have begun its cyclical adjustment and its growth is set to slow in the next few years, a Beijing-based weekly reported Tuesday, quoting Xu Xianchun, National Bureau of Statistics deputy director.
"According to our initial judgment, 2007 was probably the peak point of the current Chinese economic growth curve. The growth rate from this year on will slow down gradually," Xu told China Economic Weekly, a magazine run by the country's mass-selling newspaper The People's Daily.
According to Xu, the Chinese economy had registered a double-digit growth rate in the past five consecutive years since 2003. The growth rate was an average of 12.8 percent annually.
It was the second time since 1990 that the world's fourth largest economy witnessed such robust growth. Between 1992 and 1996, the Chinese economy soared annually by 12.4 percent on average.
Such growth, however, would not last given the law of economic cycles, Xu said, adding a slowdown was certainly to take place after a peak point on the growth curve.
"Globally, it is rare for the economies to sustain a double-digit growth rate for five years in a row. So far, only Japan, Singapore and Hong Kong have scored such performance."
He added another sign of a slowdown in the economy existed in the fact that China's growth rates for 2008 forecast by international financial institutions were all lower than 11.9 percent, the 2007 growth rate for the country.
He said the cyclical fluctuation, this time, was expected to be much milder than that in the 1990-1999 cycle and the Chinese economy looked to make a successful soft-landing in the coming years.
According to Xu, in 1999, China reported an annual growth rate of 7.9 percent, which he said was the trough of the 1990-1999 cycle.
"The current cycle has not ended yet. We are forecasting a new trough, which we think won't be too low."
Over the mounting inflationary pressure, Xu told the weekly the inflationary peak point of the current economic cycle was expected to show up in 2009, two years after the appearance of the growth peak.
"This year, we are facing a very severe situation in terms of inflation. In fact, we expected the inflation rate to drop in the second quarter but it didn't happen."
According to Xu, it was probable that the drop of the inflation rate would be further delayed in the wake of the May 12 8.0-magnitude earthquake that rocked the southwestern Sichuan Province and had killed 69,142 people as of Monday noon.
"We should pay the utmost attention to inflation. If the inflation rate reaches the peak one or two years later from now, the Chinese economy would be under huge pressure."
Last week, the Institute of Finance Research under the People's Bank of China (PBOC) said in a report that the Chinese economy had slowed because of the U.S. credit crunch, a spate of tightening measures and natural disasters.
Consumer prices were high, making the fight against inflation arduous, the report said. "The pressures for broad-based price rises are still the biggest risk for the macro-economy."
The consumer price index (CPI) rose 8.2 percent in the first four months from a year earlier, the highest in 12 years and above the government target of 4.8 percent for 2008.
The high inflation came amid high commodities prices, normal rises of China's once-low resources and labor costs and economic structural imbalances.
Inflationary pressure would be heavy for the whole year as prices of commodities and food had further room to rise. There would be increasing demand for credit in the post-quake period, the report noted.
"The government should stick to tightening policies to prevent excessive credit growth and thus provide a relatively tight environment to constrain total demand and stabilize prices," it said.
It also suggested the authorities pursue pricing reforms for resources in the medium and long term to ease price pressures caused by the extensive growth mode and excessive consumption of resources.

China's fiscal revenue up 29.4% in first four months(2008/06/10)
China's fiscal revenue was 2.28 trillion yuan (325.7 billion U.S. dollars) in the first four months of 2008, up 29.4 percent year-on-year.
April revenue jumped 17 percent year-on-year to 682.5 billion yuan, Friday's China Securities Journal reported, citing unidentified sources.
The growth rate in April was down 7.7 percentage points from March as weaker profits cut corporate income tax payments, according to the newspaper.
It said corporate income tax revenue, which accounted for 17.1 percent of 2007 fiscal revenue, was down 11.9 percent year-on-year in April and 11.7 percent from the previous month.
Fiscal revenues have grown this year, but the rate has been generally slowing. The growth rates were 42.4 percent, 36.6 percent and 24.7 percent respectively in January, February and March.
The newspaper said that analysts believed the growth slowdown would persist all through 2008.
Fiscal revenue increased 32.4 percent to 5.13 trillion yuan in 2007.

Import tax cuts to relieve pressure on price rises(2008/06/02)
The government's move to temporarily reduce import taxes on 26 commodities, including food items, medical products and cotton, will help reduce inflationary pressure, analysts said Thursday.
The Ministry of Finance said that:
Tariffs on frozen pork will be lowered from 12 percent to 6 percent from June 1 to the end of the year.
Temporary tariffs on frozen fish will be reduced to 5 percent from 10-12 percent during the same period.
Tariffs on baby food will be lowered to 5 percent from 10-15 percent.
Tariffs on soymeal and peanut meal, two major livestock feed products, will be reduced to 2 percent from 5 percent during the same period.
Tariffs on coconut oil and olive oil will be lowered from 10 percent to 5 percent, effective June 1 to the end of September.
Tariffs on medical products have also been cut. No tariffs will be levied on blood product antiserum, vaccines and antibiotics from June 1 to the end of December. The previous level was 3 percent.
Cotton imported in excess of annual quotas will be levied 357 yuan (52 U.S. dollars) per ton from June 5 to October 5. The previous level was 570 yuan per ton.
Hu Yijian, an economist at Shanghai University of Finance and Economics, said the revisions mainly target quake-relief efforts in Sichuan, which was hit by a devastating earthquake on May 12. The reduction of tariffs will help imports of commodities that are badly needed in Sichuan, Hu said.
Other analysts, however, believe that the move is to help control domestic prices, which rose by 8.5 percent year-on-year in April, the second highest in the past 12 years.
Economists and senior officials broadly agree that it is hard to attain the goal of keeping inflation below 4.8 percent - the central government target - this year.
"It does not have much to do with the earthquake," said Ma Hongman, a Shanghai-based economist. "The move is targeted at helping control prices."
Wang Li, researcher at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, added: "Failure to bring inflation under control could undermine efforts in quake reconstruction and hosting the Olympic Games." (Source: China Daily)

Crude prices rise back above 130 dollars(2008/05/30)
Crude prices rose back above 130 U.S. dollars Wednesday on Nigerian threat.
Crude prices received a fresh boost from Nigerian threat as Nigerian rebel group The Movement for the Emancipation of the Niger Delta threatened attacks on oil installations.
Buying sentiment was bolstered by a report released by Morgan Stanley. The report said limits on world oil supply could easily lift Brent crude to an unprecedented 150 dollars a barrel.
Light, sweet crude for July delivery was up 2.18 to 131.03 dollars a barrel on the New York Mercantile Exchange. In London, July Brent crude futures rose 2.47 dollars to 130.78 dollars a barrel on the ICE Futures exchange.

China's central bank governor warns against excessive price, investment rises after quake(08/05/28)
(Xinhua) -- China's central bank governor has cautioned against an overly rapid rise in prices and investment in relief and recovery after the May 12 earthquake.
"We must mainly focus on the operation of China's economy afte rthe quake. While meeting the demand of enterprises in quake relief, we should ensure the implementation of macro-control measures," said governor Zhou Xiaochuan of the People's Bank of China (PBC).
He made the statement when visiting a PBC management office in the southwestern Chongqing Municipality on Monday, according to a PBC press release on its website.
Chinese banks have been told to help quake victims and relief work by lifting credit lines, extending loan maturities and the timely writing off of bad loans in the quake zone.
Analysts fear the moves could further test the government's tight monetary policy to curb inflation and fixed-asset investment.
The PBC has earlier added 7 billion yuan (1 billion U.S. dollars) of re-lending quotas to financial institutions in quake-hit regions, in an effort to increase lenders' liquidity and support their credit supply to quake relief and reconstruction work.
Chinese banks had extended more than 6.5 billion yuan in loans by May 21 and agreed to lend a total 82.66 billion yuan (11.9 billion U.S. dollars) to the hardest-hit southwestern province of Sichuan.
"Local PBC branches should assess the losses and business situation of banking institutions hit by the quake and the influence of quake-incurred bad loans on their operation," said Zhou.
Chinese banks have been ordered to promptly write off loans that can't be repaid because borrowers in the quake zone suffered huge losses that can't be covered by insurance, or if the insurance or guarantees are not enough for the debt.
Rapidly writing off bad loans would reduce profits in the short term, as the bad loan provisions were taken from the banks' own profits, said Wang Yunquan, director of the China Banking Regulatory Commission's Sichuan bureau.
However, that was necessary for the lenders to maintain their true financial status and their asset quality, said Wang.
"If the losses are not promptly written off, the banks' asset quality grading would be affected," said Wang.
Banks must retain records of bad loans after the cancellation and keep the write-off confidential, said the CBRC.
Wang said the verification of bad loans was complex, and he vowed to crack down on fraud in the process.

Quake prices to be given close checks(2008/05/27)
China will intervene in the pricing of building materials when reconstructing those areas damaged by the May 12 earthquake.
The government will limit profit margins and set guideline prices on materials such as tents, steel, cement, glass and bricks to secure stable costs, the National Development and Reform Commission said on its Website.
Local governments have not been allowed to issue price increase measures recently and pricing authorities are forbidden to charge inordinately for disaster-relief products.
Anyone involved in hoarding, price-gouging, spreading rumors or violating price intervention policies will be severely punished. The commission has also established a 24-hour hotline (12358) to handle complaints about price-gouging.
Sichuan Province has sent out 12 teams to monitor market prices and so far more than 60 price gouging violations have been discovered, Li Chengyun, the deputy governor of the province, said yesterday.
"We have also punished the people involved in another 96 cases of market violations," he said.
Li said the provincial supervision department was investigating whether people were misusing victims' tents after media reported that some government officials had arranged for relatives to reside in the tents.
"We have punished four Party officials in Dujiangyan," Li said.

Experts: Tremor likely to be felt in prices（2008/05/26）
     Tremor of the May 12 earthquake is more likely to be felt in macroeconomic regulations as inflation continued to hover above 8 percent in April.
"People are assessing the impact of the quake, but life is priceless," said Zhuang Jian, senior economist with the Asian Development Bank (ADB) in Beijing.
But he added that while the quake caused extensive casualties and damage, it will not shake the overall development of the national economy. "The overall impact on gross domestic product (GDP) growth won't be very big."
Agreed Liang Hong, economist with the Goldman Sachs Asia in Hong Kong. "A severe natural disaster of this magnitude will likely have a negative impact on the real economy, but it's likely to be limited and short-lived," she said in a research note.
Sichuan province constitutes about 4 percent of the national GDP and its industrial output accounts for only 2.5 percent of the national total.
\\The hardest hit counties are mostly in the remote mountain areas. The quake-induced short-term loss of production is thus likely to be very limited, she said.
The reconstruction work after the quake is expected to contribute to GDP, investment and consumption growth, further mitigating the impact of the quake on economic growth.
But the quake may mount more inflationary pressures, which is a bigger concern and requires tighter policies, said analysts.
In April, the consumer price index (CPI), the key gauge of inflation, rose 8.5 percent, second highest in 12 years. The producer price index, a leading indicator of inflation, rose 8.1 percent in April, the ninth consecutive month that it increased.
Analysts said it could take about six months for producer price rises to be transferred to the consumer price zone. Therefore prices in the second half of the year may not ease significantly, as some economists had anticipated.
The ample liquidity in the market will worsen the situation, said Sun Lijian, economist with Fudan University.
Meanwhile, China's imports of major commodities such as oil and raw materials will add to domestic inflationary pressures.
The central bank had raised the bank reserve requirement ratio shortly after the CPI figure was released last Monday, pointing to the urgency of controlling prices.
Since Sichuan is a major rice producer, the quake may intensify fears of food price inflation, especially against the backdrop of global rice price rise, said Sun Mingchun, senior economist of Lehman Brothers Asia.
The severely damaged transport links could make things worse. "There could be renewed pressures on food inflation because of Sichuan's relative importance in agricultural production and the damage to the transportation system," wrote Goldman Sachs' Liang.
Given the April inflation figure, people are concerned the current monetary policy may not be tight enough and some are arguing for another increase in the interest rate.
"Inflation is a very serious problem and will hurt the Chinese economy," warned Chen Gong, chief economist and chairman of Beijing-based Anbound Consulting.
But by using the reserve requirement ratio as a tool to restrict liquidity, the central bank seems to be reluctant to raise the interest rate, analysts said.
"Policymakers try to strike a balance between controlling inflation and maintaining sound economic growth," Chen said. "It's a tough goal."
Whether or not to raise the interest rate, however, does not depend purely on domestic factors. Policymakers must take into account the condition of the US economy and the Federal Reserve's interest rate cuts since a widening of the gap between Chinese and US interest rates will lead to inflow of speculative money, said Zhu Baoliang, senior economist with the State Information Center.
Some economists also warned the US economy may continue to sink deeper, dragging down the world economic growth and demand for Chinese exports.
"If policymakers rush to raise the interest rate now, they will be left with less room later if the Chinese economy slows," ADB's Zhuang said. (Source: China Daily)

China 17th competitive economy（2008/05/23）
      China dropped two places to 17th in the latest World Competitiveness Yearbook compiled by Swiss business school IMD, but its position has generally continued rising in recent years, the compilers said on May 21, 2008.
This year's drop isn't statistically significant, and "China has been on the upward path" in recent years, IMD World Competitiveness Center research fellow Suzanne Rosselet said. In 1995, China ranked 34th.
Rosselet said many factors have contributed to the drop, such as domestic price hikes and the environmental costs of development.
The U.S. continued to top the competitiveness rankings for the 15th consecutive year despite signs its economy is declining.
The IMD economists said the report was based on 2007 data that don't reflect the U.S.' current economic woes. "The big question is whether the United States will be No 1 after this year," project director Stephane Garelli said.
Singapore and China's Hong Kong kept their respective second- and third-place rankings, and the gap is narrowing between these two economies and the U.S.', the IMD study said.
Switzerland climbed two places to fourth.
Among the so-called "golden BRIC" countries, Brazil jumped six places to 43rd; Russia dropped by four to 47th; and India dropped two places to 29th.
The study evaluated 55 economies using 331 criteria to measure how those nations create and maintain favorable business conditions. Such factors as economic performance, government efficiency, business efficiency and infrastructure are major criteria for the measurement. In economic performance, China ranked No 2, and it ranked 12th in government efficiency.
"China is an economic miracle by any standard," John Wells, who became head of IMD in April, said on May 21 in Beijing.
But Rosselet said China's rapid economic growth has come at a cost.
Its exports, for example, have provided inexpensive products for Western countries, but also consumed a lot of resources and produced a lot of pollution in the country, analysts said.
Rosselet also said the Sichuan earthquake, which devastated the province last Monday, would have a marginal impact on the "resilient" Chinese economy. In addition, the government's transparency and openness in dealing with the disaster would boost its international image, she added. (Source: China Daily)

Experts: Tremor likely to be felt in prices（2008/05/22）
     Tremor of the May 12 earthquake is more likely to be felt in macroeconomic regulations as inflation continued to hover above 8 percent in April.
"People are assessing the impact of the quake, but life is priceless," said Zhuang Jian, senior economist with the Asian Development Bank (ADB) in Beijing.
But he added that while the quake caused extensive casualties and damage, it will not shake the overall development of the national economy. "The overall impact on gross domestic product (GDP) growth won't be very big."
Agreed Liang Hong, economist with the Goldman Sachs Asia in Hong Kong. "A severe natural disaster of this magnitude will likely have a negative impact on the real economy, but it's likely to be limited and short-lived," she said in a research note.
Sichuan province constitutes about 4 percent of the national GDP and its industrial output accounts for only 2.5 percent of the national total.
\\The hardest hit counties are mostly in the remote mountain areas. The quake-induced short-term loss of production is thus likely to be very limited, she said.
The reconstruction work after the quake is expected to contribute to GDP, investment and consumption growth, further mitigating the impact of the quake on economic growth.
But the quake may mount more inflationary pressures, which is a bigger concern and requires tighter policies, said analysts.
In April, the consumer price index (CPI), the key gauge of inflation, rose 8.5 percent, second highest in 12 years. The producer price index, a leading indicator of inflation, rose 8.1 percent in April, the ninth consecutive month that it increased.
Analysts said it could take about six months for producer price rises to be transferred to the consumer price zone. Therefore prices in the second half of the year may not ease significantly, as some economists had anticipated.
The ample liquidity in the market will worsen the situation, said Sun Lijian, economist with Fudan University.
Meanwhile, China's imports of major commodities such as oil and raw materials will add to domestic inflationary pressures.
The central bank had raised the bank reserve requirement ratio shortly after the CPI figure was released last Monday, pointing to the urgency of controlling prices.
Since Sichuan is a major rice producer, the quake may intensify fears of food price inflation, especially against the backdrop of global rice price rise, said Sun Mingchun, senior economist of Lehman Brothers Asia.
The severely damaged transport links could make things worse. "There could be renewed pressures on food inflation because of Sichuan's relative importance in agricultural production and the damage to the transportation system," wrote Goldman Sachs' Liang.
Given the April inflation figure, people are concerned the current monetary policy may not be tight enough and some are arguing for another increase in the interest rate.
"Inflation is a very serious problem and will hurt the Chinese economy," warned Chen Gong, chief economist and chairman of Beijing-based Anbound Consulting.
But by using the reserve requirement ratio as a tool to restrict liquidity, the central bank seems to be reluctant to raise the interest rate, analysts said.
"Policymakers try to strike a balance between controlling inflation and maintaining sound economic growth," Chen said. "It's a tough goal."
Whether or not to raise the interest rate, however, does not depend purely on domestic factors. Policymakers must take into account the condition of the US economy and the Federal Reserve's interest rate cuts since a widening of the gap between Chinese and US interest rates will lead to inflow of speculative money, said Zhu Baoliang, senior economist with the State Information Center.
Some economists also warned the US economy may continue to sink deeper, dragging down the world economic growth and demand for Chinese exports.
"If policymakers rush to raise the interest rate now, they will be left with less room later if the Chinese economy slows," ADB's Zhuang said. (Source: China Daily)

Chinese banks provide reconstruction loans（2008/05/21）
    Chinese banks have offered 2.99 billion yuan (429 million U.S. dollars) of loans for reconstruction work in the earthquake-hit areas in Sichuan Province as of yesterday noon, the top banking regulator said.
The China Banking Regulatory Commission also said yesterday on its Website that banks and their employees have donated 750 million yuan to the quake-hit area.
The destructive 8.0-magnitude quake hit the province on May 12 and so far the death took has reached more than 34,073 lives as yesterday noon.
Industrial & Commercial Bank of China, the country's largest bank, plans to grant over 10 billion yuan of loans to the relief work, the regulator said. More than 90 percent of banking outlets have resumed operations in Sichuan.
ICBC allocated 100 automatic teller machines to the province to smooth cash withdrawals in the quake-hit area. Up to May 15, 589 outlets of the bank have resumed operations, representing 91 percent of its network in the province.
The Chengdu Branch of the Export-Import Bank of China also signed credit contracts worth 600 million yuan with three Chengdu-based companies for quake relief on Sunday.
More than 90 percent of banks' outlets resumed operations on May 16 even though some are just "tent banks" as employees work to offer basic financial support in the severely hit area.
The People's Bank of China offered more credit support to the quake-hit area to ensure ample cash supply in the area.
The central bank gave loans of 1.5 billion yuan to its Chengdu branch to ensure rural cooperatives have an adequate supply of credit in the quake-hit area, while another 1 billion yuan was offered to Chengdu and Mianyang City, the central bank said on its Website yesterday.
The central bank said last Wednesday it decided to offer credit worth 5.5 billion yuan - 3.3 billion yuan of credit to Sichuan Province and 2.2 billion yuan of credit to Gansu Province - to ensure cash supply in the disaster area.

JPMorgan Chase　 quake not to dampen China corporate profit（2008/05/20）
    (Xinhua) -- Profit for China's listed companies may grow 20 percent this year despite the strong quake that shook southwest China, according to a senior official with JPMorgan Chase.
"The quake would have limited effect on the national GDP growth and further tightening on the economy is unlikely in the second half of this year," Li Jing, China head of JPMorgan Chase said at a press conference held on Friday.
"Sichuan is a major province that provides farm produces like pork, a staple meat for Chinese people, and the consumer prices in the southwest region might rise substantially," she said.
"The regional gross domestic product (GDP) growth would also be affected in the second quarter but its GDP makes up only a minor part of the national GDP," she said.
Last year, the province saw its GDP value reaching 1.05 trillion yuan (150 billion U.S. dollars), accounting for 4 percent of the revised national figure, which was 24.953 trillion yuan.
"The national economic climate in second quarter would no doubt outperform the first one that was the worst in history," said Li, adding some enterprises in financial, manufacturing, consumption and energy industries could see higher profit rise.
Bottom-line growth of large domestic banks may be up to 40 percent in the second half of this year, thanks to a wider net interest margin, development of infrastructure and better assets quality, she said.
While industries like textile, garment and furniture are suffering loss since 2005, high value-added providers including electronic and telecom equipment sectors are witnessing rising profits, Li said.
"China's shipment and machinery equipment will be competitive in the international market," she added.
The Sichuan earthquake, measuring 7.8 on the Richter scale on Monday, had taken more than 21,500 lives and buried 14,000 others as of 4 p.m. Friday, according to vice governor of Sichuan Li Chengyun.
He said that 159,000 people were injured in the massive earthquake and 4.8 million people had been relocated.

Central bank：China's economy won't see galloping inflation（2008/05/19）
     Despite global inflation, the Chinese economy is unlikely to see galloping inflation thanks to its own growing impetus, said Su Ning, vice governor of the People's Bank of China (PBOC), on Thursday.
It is imperative for the Chinese government to pay close attention to inflation pressure in the future, Su told a one-day forum on Sino-Indian financial cooperation.
Globally, due to the continuous depreciation of the U.S. dollar and strong growth of some emerging economies, prices of energy, raw material and farm products have kept rising, which has pushed up inflation rates worldwide, he said.
Over the last year or so, China has been faced with mounting pressure on inflation.
China's consumer price index, the main gauge of inflation, has risen from above three percent in March last year, to above 6 percent in August, and to 8.5 percent year-on-year last month, as a result of the robust national economy and domestic food price rises coupled with soaring international energy prices.
China, however, is still capable of warding off galloping inflation because the world's fourth largest economy, which has enjoyed robust growth in the last few years, has a favorable fiscal situation and enterprises' profitability has significantly improved, said the vice governor.
He said China's macro-economic policies at present are primarily aimed to guard against a shift from structural price rises to evident inflation.
Regarding the fiscal policies, Su said it is necessary to maintain stability and continuity. As to the monetary policies, he noted that the main task is to create a favorable environment for curbing inflation.
Earlier on Monday, the PBOC announced that it would raise the reserve requirement ratio for commercial banks by half a percentage point to curb excess liquidity and ease inflation.
This will be the fourth such move this year, and it will lift the country's reserve requirement ratio to a new high of 16.5 percent as of May 20.
"The rise is aimed at strengthening liquidity management in the banking system and steering reasonable growth in bank credit," the central bank said in a statement.
The PBOC raised the reserve requirement ratio on Jan. 25, March 25 and April 25, respectively, on top of 10 such moves in 2007. It also raised interest rates six times last year.
The new tightening measure was unveiled on the same day as the National Bureau of Statistics said the country's inflation rate hit 8.5 percent in April, up from 8.3 percent in March and only slightly lower than the nearly 12-year high of 8.7 percent in February.

China's fixed asset investment up 25.7% in Jan-April（2008/05/16）
     Urban fixed-asset investment rose 25.7 percent year-on-year to 2.841 trillion yuan (406 billion U.S. dollars) in the first four months of this year, the National Bureau of Statistics (NBS) said Thursday.
The growth figure represents a slight acceleration -- 0.2 percentage point -- from the same period last year.
Investment in China's booming real estate sector grew 32.1 percent to 695.2 billion yuan, said the NBS.
The NBS reported earlier this week that inflation, as measured by the consumer price index, was up 8.5 percent year-on-year in April. The figure compared with 8.3 percent in March and a nearly 12-year-high of 8.7 percent in February.
Another key inflation indicator, the producer price index, which measures the cost of goods when they leave the factory, surged 8.1 percent in April.
Primary industry (farming, fishing, forestry and the like) continued to grow the fastest among industrial sectors, expanding 71.6 percent during the first four months. It rose 31.1 percent for all of last year.
Investment in the secondary and tertiary industries rose 25.9 percent and 24.9 percent, respectively.
Analysts said that the 71-percent surge in primary industry investment was a positive sign as it showed that the government's move to shore up agricultural development was effective.
In the "No.1 Document" published in January, the government promised to greatly increase investment this year to promote agriculture and the rural economy and improve the lives of hundreds of million rural residents.
Investment by the central government expanded 14.8 percent year-on-year to 268 billion yuan and that by local governments was up 27 percent to 2.573 trillion yuan.
Investment in state-owned and state-controlled enterprises was 1.153 trillion yuan, up 16.9 percent.
The first four months saw the commencement of 59,676 projects, 7,993 more than in the same period last year. Planned investment in these new projects was 1.93 trillion yuan, down 5.1 percent.

China's industrial output up 15.7% in April（2008/05/15）
      (Xinhua) -- The industrial output of China's major enterprises grew 15.7 percent year-on-year in April, the National Bureau of Statistics (NBS) said Wednesday.
The figure represents a drop of 2.1 percentage points over the previous month, or a drop of 1.7 percentage points over the same month of last year the bureau said.
Major enterprises are those with an annual sales volume of at least five million yuan.
An analyst with the NBS said the Tomb-Sweeping Day, which fell on April 4, was for the first time marked by a public holiday when a large number of industrial enterprises stopped production activities. That was one of the reasons why the industrial production cooled down in the past month.
The sales ratio of the enterprises stood at 97.8 percent, 0.5 percentage points lower than the same period of last year.
Delivered exports totaled 659.5 billion yuan (94.2 billion U.S. dollars) in value, up 15.6 percent.
Two-digit growth in the industrial output was registered in the textile, nonmetal minerals products, ferrous metals smelting and pressing, telecommunications devices, computer and other electronic devices, and chemical materials and related processing industries.
The output of coal rose 13.9 percent year on year, crude oil, 0.5 percent, electricity, 12.8 percent, and rolled steel, 10.2 percent.
Production of sedans reached 520,000 units in April, an increase of 26.3 percent from a year earlier, the bureau said.

China's Jan.-April steel exports down 24%（2008/05/14）
      Rolled steel exports ebbed in the first four months of this year, reflecting China's efforts to cut exports of the smokestack industries and the increasing anti-dumping actions against Chinese products abroad.
The General Administration of Customs said on Tuesday that between January and April, China exported 16.17 million tons of rolled steel, down 23.9 percent year-on-year. The exports were valued at 14.36 billion U.S. dollars, up 4.1 percent year-on-year.
In April, exports were 4.78 million tons, valued at nearly 4.44billion U.S. dollars.
State-owned enterprises accounted for 56.5 percent of rolled steel exports during the first four months.
Sales to the Republic of Korea, members of the Association of Southeast Asian Nations and the United States accounted for 68.6 percent of exports.
However, exports to the United States and European Union dropped 46.4 percent and 27.3 percent, respectively.

China's producer price index up 8.1% in April（2008/05/12）
       (Xinhua) -- The producer price index (PPI) for China's industrial products rose 8.1 percent in April over the same month last year, putting on more pressure on the nation's inflation rate, the National Bureau of Statistics said Friday. The factory-gate prices of raw materials, fuel and power were up 11.8 percent.
The National Bureau of Statistics (NBS) said on Friday the rise in the PPI, which measures the value of finished products when they leave the factory, was only 2.4 percent as recently as August, indicating intensifying inflation pressure.
Li Xiaochao, spokesperson of the NBS, said higher ex-factory prices could lead to a rising CPI, as producers might seek to pass on their own rising costs to consumers.
China's CPI, a key measure of inflation, was up 8.3 percent in March, following an 8.7 percent rise in the previous month, according to the NBS.
China has set an annual CPI target of 4.8 percent this year.
Factory-gate prices of crude oil surged 37.9 percent in April over the same period last year, while gasoline was up 10.8 percent, diesel 10.2 percent and kerosene 11.7 percent.
The producer prices of raw coal jumped 20.9 percent and those of steel products rose between 24.9 percent and 41.1 percent.
The purchasing prices, or costs, of fuel and power rose 21.2 percent, ferrous metals 20.8 percent, non-ferrous metals 6,1 percent and chemical raw materials 4.2 percent.
The PPI for manufactured goods was up 7.2 percent in the first four months of this year, while the costs of raw materials, fuel and power rose 10.3 percent.
The price index of food, a major component of the consumer price index (CPI), was up 11.9 percent, exceeding that for garments (2.3 percent) and daily commodities (3.7 percent). The prices of consumer durables were down 0.5 percent, said the NBS.

Financial centers with varied cores promoted（2008/05/09）
       BEIJING, May 8 -- China's central bank will encourage local governments to create financial centers and will guide them to develop the centers which will have different focuses, a spokesman said Wednesday.
"We understand how some cities want to turn themselves into finance centers and we will definitely encourage them," said Li Chao, a spokesman for the People's Bank of China, in Shanghai.
"But the finance centers will have to be classified at different levels and with different focuses based on the financial infrastructure of the cities."
Li made the comments when asked about the central bank's view over the potential for competition among mainland cities, including Shanghai and Beijing, which all wish to become financial hubs.
Earlier this month Beijing's government unveiled a proposal which, for the first time, stated that it is planning to make the city "a finance center with an international influence."
Tianjin is developing its Binhai New Area as a financial zone by applying to launch the country's first national over-the-counter stock exchange. Shenzhen in Guangdong Province is on track to unveil the nation's growth enterprise board.
Li said that a senior official at another city in central China recently talked to him expressing the wish to set up a financial center. "We encourage local governments to participate in finance development," Li said.
Li noted that Shanghai has strong finance infrastructure advantages and will be fully supported by the central bank and other regulators as it bids to become an international financial center.
Shanghai is set to host the city's first high-level annual international finance forum tomorrow and Saturday. The Lujiazui Forum will be attended by the chairmen of China's banking, insurance and securities regulatory bodies.
Guest speakers include Zhou Xiaochuan, the governor of China's central bank, David McCormick, under secretary for international affairs for the US Department of the Treasury and senior executives at Morgan Stanley and Goldman Sachs.
"We hope to attract more international awareness of Shanghai through the forum," said Fang Xinghai, director of the Shanghai government's financial services office, at a media briefing. "We'd like to borrow overseas experience and expertise to deepen the country's financial reforms."
(Source: Shanghai Daily)

Inflation expected to go down in Q2（2008/05/08）
        Inflation could dip to 7.5 percent in the second quarter from 8 percent in the first, but inflationary pressures will stay strong because of surging grain prices and robust investment, said a top government think tank.
"Seasonal changes and government measures to boost agricultural supplies may cause consumer prices to slide in the second quarter," the State Information Center said in a report. "But inflationary pressure is still mounting because of domestic and international factors."
The Beijing-based think tank falls under the National Development and Reform Commission.
The government is trying to limit consumer inflation under 4.8 percent in 2008 but the consumer price index gained 8.7 percent in February, the highest in 12 years.
"The ongoing price surge of agricultural products in international markets will add to the inflationary pressure in China," the center warned.
Prices of food, which makes about a third of China's CPI basket, is key for the government to tame inflation as it accounted for about 70 percent of the inflation last year.
Global agricultural prices climbed 14.6 percent in the first quarter, according to the Ministry of Commerce. Rice prices have more than tripled to $1,000 per ton in the past year.
China, largely self-sufficient in grains, is trying to stabilize domestic rice prices with measures such as export bans and agricultural subsidies. But there are concerns about how long the nation can hold its rice price at about one-fourth of that in overseas markets, given recent reports of illegal rice exports in the past months.
The center also said China is under growing pressure to raise domestic grain prices due to a demand-supply gap and mounting agricultural production costs from fertilizer and fuel.
Zhou Xiaochuan, governor of central bank, had anticipated inflation to ease after the lunar New Year this February. But he didn't predict the full-year outlook given the uncertainties in grain and commodity prices, according to Reuters.
The think tank said investment in China would remain strong in the second quarter thanks to ballooning corporate profits and local officials' appetite for investments after a personnel reshuffle in the beginning of the year.
Prices of investment goods such as machinery and equipment gained 8.6 percent in the first quarter, compared with 4.7 percent in 2007, the center said, adding the price rise will continue in the second quarter as the investment momentum will continue.
The center also forecast China's economy will expand by 10.8 percent from March to June, up 0.2 percentage points from the first quarter.
(Source: China Daily)

Growth in exports set to drop to 10% （2008/05/07）
         Weak external demand is set to pull down China's export growth to 10 percent after the 25.7 percent jump in 2007, a research unit under the Ministry of Commerce said.
The country's 2008 trade surplus may also drop to 200 billion U.S. dollars from a record 262 billion dollars last year, Li Yushi, director of the Chinese Academy of International Trade and Economic Cooperation, was quoted by yesterday's Shanghai Securities News as saying.
China's trade surplus fell 10.6 percent year on year to 41.4 billion dollars in the first quarter this year, the first time the quarterly figure headed southwards
The nation's export growth slowed to 21.4 percent in the first three months from 27.8 percent in the same period last year, mainly because of weaker demand from the United States.
Chinese exporters will face tougher internal and external environments this year, which will add pressure on their operations, the research agency said in a report, according to the newspaper.
However, the country's export growth in future may be helped by robust exports of electromechanical products, according to Liu Haiquan, vice director at the comprehensive department under the ministry.
Exports of electromechanical products, which jumped 23.1 percent in the first quarter of this year from the same period a year ago, have a big potential to grow even more, Liu was quoted as saying.

Chinese grain reserves sufficient（2008/05/06）
         BEIJING, May 5 -- Without destructive natural disasters, current grain reserves in China plus this year's outputs are more than enough to feed its people, said Zeng Liying, deputy director of the State Administration of Grain.
The country's grain inventories, including the government's, enterprises' and farmers', are currently at around 250 million tons, accounting for half of national annual grain consumption, and this ratio is much higher than the international warning line of 17 to 18 percent, said Zhang Xiaoqiang, deputy director of the National Development and Reform Commission, on April 27 at the 6th annual conference of Chinese importers and exporters.
If there are no natural disasters that affect Chinese agriculture this year, grain output is expected to continue to grow with the same momentum we enjoyed in the last four years', Zeng said confidently. China's grain production totaled more than 500 million tons last year, 70.85 million tons more than in 2003.
With the exception of a portion of demand for soybeans, which is supplied from overseas, China is more than self-sufficient in wheat, rice and corn. Currently skyrocketing grain prices are primarily driven by soaring demand for biofuels as well as rising machinery, fertilizer, labor and farming land costs. But China is working to stabilize grain prices.
This year, the government has appropriated 130.7 billion yuan more in agricultural investment than last year, and the central budget added 25.3 billion yuan in subsidies for farmers and further leveraged minimum grain purchase prices.
Zeng also introduced that China's current wheat and rice prices are far below international averages. Regular price fluctuations are related to the balance of domestic demand and supply, and proper price raises could increase farmer's incomes and keep them working the farmlands.
Regarding some reports on regional shortage of grain inventories, Zeng explained that grain inventories are a dynamic number, and peaks following large scale seasonal purchasing and gradually falls over the period of a year. The reported shortage in grain reserves is based on a few deserted or idle storage facilities, used during late 1990s when China experienced years of plentiful harvests.
The State Administration of Grain is now collecting national grain purchase, sales and inventories statistics once every 10 days, and promises to keep an eye on nationwide grain market balances, said Zeng.

China's inflation pressures ease, but target still elusive（2008/05/05）
         BEIJING, May 4 (Xinhua) -- The slowing growth of China's main inflation indicator is set to continue in the April figures, thanks to falling farm produce prices, market analysts said on Sunday.
The consumer price index (CPI), which hit 8.7 percent for February and 8.3 percent for March, would probably be around 8 percent for April over the same month last year, said Chen Jijun, an analyst with Citic Securities.
Falling farm produce prices were the main factor dragging down the rise in the CPI, said Chen.
Although, grain prices remained stable but high, vegetable prices dropped significantly last month thanks to abundant supply, with some categories falling by 50 percent.
Zhang Ying, chief analyst with Hujie Investment, forecast the growth in the index would continue to slow after the 11-year peak in February.
The annual goal of 4.8 percent, however, remained a difficult target to hit, said chief economist with the National Bureau of Statistics (NBS) Yao Jingyuan, in an interview with the China Central Television on Wednesday.
The CPI surged 8 percent in the first quarter, 5.3 percentage points higher than the same period last year, indicating continuing inflationary pressures, he said.
Food prices, the key driving force of the CPI, remained high with pork prices rising 63 percent year on year, said Yao.
Up to six million pigs died in the severe winter weather this year, driving up prices, he said.
External factors confounded the problem. International crude prices more than doubled in less than five months, greatly affecting domestic energy price controls, Yao said.
As world economies continued to integrate, global grain price rises also affected the domestic market.
The price of wheat had climbed by 112 percent and corn by 47.3 percent since September 2006, reaching a 10-year high. Rice prices also doubled to stand at 760 U.S. dollars per ton.
Yao said sufficient grain reserves and good production would guarantee supplies, barring any natural disasters.
The 4.8 percent annual target manifested the central government's resolution to contain inflation. "We have not only determination, but also concrete measures," Yao said.

China's large SOEs told to be ready for tough times（2008/05/04）
         BEIJING, May 3 -- Tighten your belts and brace for two years of tough times, large State-owned enterprises (SOEs) have been told by the minister supervising the country's 150 largest SOEs.
"Please keep a close watch on your purses and do not splurge," Li Rongrong, minister of the State Owned Assets Supervision and Administration Commission (SASAC), was quoted as saying by Economic Observer newspaper on Friday.
He made the warning on April 24 when he was reviewing the performance of the SOEs with their bosses, but the speech was made public only on Friday.
Some of the SOEs have reported a slowdown in profit growth in the first quarter. They booked revenues of 2.6 trillion yuan ($371 billion), up 27 percent year-on-year, but their profits declined by almost 3 percent over the same period.
An Fengming, an analyst with the SASAC research center, said the companies must improve risk controls.
The US subprime crisis has caused a slowdown in the global economy, and China should be fully prepared for it, he said.
Last month, the International Monetary Fund revised its global economic growth forecast this year to 3.7 percent, down from 4.9 percent.
In the first quarter, China's exports grew 21.4 percent, 6.4 percentage points lower year on year; and a group of economic institutes led by Peking University predicted that export growth could slow down to 19 percent in the second quarter.
Rising inflation and raw material costs have also added to the woes of some large SOEs.
Although oil and coal prices continued to rise on international markets, profits in the two sectors dropped by a third because SOEs were forbidden to raise prices as the government considers taming inflation more of a priority than the profits of such SOEs as Sinopec and PetroChina.
Shen Minggao, chief economist of Citigroup China, said the costs of raw materials and labor were significantly undervalued, so there are two choices: Either raise domestic prices or cut profits, and the second scenario is more likely for many Chinese companies.
To fend off the challenges, Li warned companies to be more careful about borrowing and urged them to keep more money on hand.
In the operational budgets of the 150 SOEs, 67 companies said they would borrow more this year for expansion, and some companies' asset-liability ratio was even planned for up to 80 percent.
A total of 38 companies said they had negative working capital in the first quarter.
(Source: China Daily)

Experts: China should still be alert to impact of U.S. credit crisis（2008/04/30）
        China should still be alert to the credit crisis starting in the United States more than one year ago that has afflicted the Chinese financial sector and export, Ou Minggang, deputy editor-in-chief of Chinese Banker magazine, said on Saturday.
Ou told Xinhua during an interview that domestic banks and other financial institutions bear the brunt of the widespread U.S. subprime mortgage crisis, as those agencies' asset value and book earnings would dip to some extent.
"Currently the impact on domestic financial institutions is still limited," he said.
The Industrial and Commercial Bank of China, the country's largest lender, said at the end of last month its 2007 net profit rose 64.9 percent year-on-year to 82.3 billion yuan (11.7 billion U.S. dollars).
The Bank of China posted a 31.3 percent net profit rise in 2007 after booking 1.3 billion U.S. dollars as an impairment allowance for its 4.99 billion U.S. dollars in investment in securities linked to U.S. subprime mortgages by the end of last year.
However, the International Monetary Fund (IMF) said on April 8 that the recent financial turbulence triggered by the collapse of the U.S. subprime mortgage market could cost the global financial system to the tune of 945 billion U.S. dollars.
"The global financial system has undoubtedly come under increasing strains since October 2007, and risks to financial stability remain elevated," the IMF warned in its latest Global Financial Stability Report.
Ou said, "The crisis also made Chinese financial supervision regulators face up to the challenges of balancing financial innovation and risks, which requires them to push forward the reforms in the country's financial system in a more cautious manner."
Experts warned that financial risks know no national boundaries and some foreign capital has fled from the Chinese financial market as many banking titans including Citigroup and Merrill Lynch were in deep water in credit crisis.
China's benchmark Shanghai Composite Index, which covers both A and B shares, shrank nearly half from the peak of 6124.04 points of Oct. 16 last year to 3094.67 points on April 18.
The overnight announcement of a cut in share trading taxes drove Chinese stocks 9.29 percent higher in soaring turnover on Thursday, with the key Shanghai Composite Index up 304 points to 3,583.03, the largest gain since Oct. 23, 2001.
Chinese regulators announced curbs on the sale of non-tradable shares that come out of lock-up periods on April 20, another move to bolster the falling market.
However, market observers held that the credit crisis and the U.S. economic slowdown are still casting gloom over Chinese investors' confidence.
Experts said the crisis was spreading beyond the financial sector. Consumption confidence in the United States is dampened as the credit crisis unfolded, with Chinese exports also hurt.
From January to March, China's total exports rose 21 percent to206 billion U.S. dollars, 6.4 percentage points lower than a year earlier. The exports to the U.S. grew 5.4 percent to 53 billion yuan, 15 percentage points lower than the same period of last year, according to customs statistics.
In the trade hub of southern Guangdong Province, the growth of exports to the United States dwindled to 4.8 percent in the first quarter of this year from 15.5 percent in the same period of 2007,said Wu Gongquan, vice director-general with the province's department of foreign trade and economic cooperation.
Zhang Yansheng, director of the International Economic Research Institute under the National Development and Reform Commission, said China needs to shift its economic driving force from relying on exports to domestic consumption, technology upgrading and management innovation.
Ou added that the country should increase financial transfer payments to help low-income families to consume more and boost the consumption in the vast rural areas.
Experts suggested that Chinese exporters should upgrade their products mix and open new markets besides their traditional key markets in the United States and Europe.

Report: Chinese economy to maintain 10% growth despite slowdown in 2008（2008/04/29）
        Chinese Academy of Social Sciences (CASS) predicted a 10.7 percent growth in the country's gross domestic product (GDP) in 2008, though it said the speed would be slower compared with the previous year.
The added value of the agricultural sector would increase by 3.2 percent, and that of the industrial and the service industries would be 12.2 percent and 10.9 percent respectively, according to a report released by CASS.
The fixed assets investment would hit 17.03 trillion yuan (about 2.43 trillion U.S. dollars), up 19.1 percent year-on-year, still significantly higher than the growth of GDP and consumer price index (CPI), said the report on China's economic situation in 2008.
The high-flying prices would decline in latter half as the government policies start to pay off, but the annual commodity retail price index and the CPI would still be around 4.4 percent and 5.5 percent, the report said.
The annual per capita disposable income in urban areas would gain 11.1 percent, and that in rural areas would increase by 7.3 percent. Both the urban and rural income growth would be lower than 2007, the report said.
The total retail sales of consumer goods would for the first time rose above 10 trillion to 10.46 trillion yuan, and continue to be a major factor behind national economic growth, said the report.
Import and export growth would slow down to 23.3 percent and 19 percent because of the uncertainties in international economy, and the trade surplus would be 270 billion U.S. dollars, said the report.
China posted a GDP growth of 11.9 percent in 2007, according to the results of preliminary verification announced by the National Bureau of Statistics early this month.

Slowdown, rising yuan put exporters in tough spot（2008/04/28）
        GUANGZHOU, April 23 (Xinhua) -- It's a tough choice this year for exporters at the trade fair here: fewer orders or paper-thin profits.
The yuan is stronger and the world market is weaker, the result of the unfolding credit crisis. And that's had an impact on the number of buyers and orders for exporters who are attending the China Import and Export Fair in Guangzhou, capital of the southern Guangdong Province.
Figures from the fair show 128,155 foreign buyers in attendance, 5.8 percent fewer than the last spring fair. The number of U.S. purchasers decreased 23.3 percent and those from France and Germany were down 11.8 percent and 9.5 percent, respectively. "The decrease in U.S. and European Union buyers will cut our orders by about 30 percent," said a representative of the Shenzhen Lianchuang Company, which exports household appliances to the United States and Europe.
Other firms also felt the pinch, with few buyers visiting their booths and fewer signed contracts.
"Chinese goods are popular among U.S. customers, but we have to reduce our purchases because of decreasing U.S. demand," Ben Noonan, sourcing manager of Smartful Home, a U.S. textile importer, told Xinhua.
China's exporters have been complaining about losing orders as a result of the change in the value of the yuan, which has risen almost 4.6 percent against the U.S. dollar this year, making "Madein China" more expensive.
Customs statistics showed China's exports to the United States rose 5.4 percent year-on-year in the first quarter, a deceleration of 15 percentage points compared with the same 2007 period. Exports to the EU grew 24.2 percent, 10.3 percentage points lower.
Before the fair, there was talk that some Chinese exhibitors might hike prices and pass through the higher costs of raw materials and labor. But most found that they had to compete on prices to win any orders at all.
There were more buyers from new markets, including Africa and South America countries, but they were there for bargains, so price increases could scare them off, said Yu Hong, of China Minmetals Non-ferrous Metals Co..
If the pressure of rising costs cannot be passed on, Chinese manufacturers would be further pinched during the second half of this year, Yu said.
The fair, also known as the "Canton fair" after the city's old name, was considered as the "barometer" of the country's foreign trade. It was originally a biannual export-promotion event until the 101st session in the Spring of 2007, when its name officially changed to the present name of the China Import and Export Fair from the Chinese Export Commodities Fair.
The fair has two phases this year, from April 15 to 20 and from April 25 to 30. The first phase featured textiles, garments, health products, household appliances, tools, small vehicles and hardware. Food, tea, kitchenware, decorations, toys, sporting goods, and office supplies will be on show in the second phase.

China cuts stock stamp tax to 0.1% to support market（2008/04/25）
        (Xinhua) -- The Chinese government on Wednesday announced it is to cut the share trading stamp tax from 0.3 percent to 0.1 percent from April 24 in an effort to boost the equities market, which has fallen 46 percent from its record high on Oct. 16.
Experts expected the long-expected concrete support measure to give a strong boost to weak investor sentiment, following heavy sell-offs this year.
The benchmark Shanghai Composite Index closed 4.15 percent higher at 3,278.33 on Wednesday, before the tax cut announcement. Despite the rise, it has dropped 37.7 percent this year after almost doubling last year.
After approval from the State Council, or Cabinet, the Ministry of Finance (MOF) and State Administration of Taxation (SAT) decided to cut the transaction tax, said a government statement.
The tax would be levied on both sides of the transaction, said the statement.
The government raised the stamp tax to 0.3 percent from 0.1 percent on May 30 last year, in a bid to cool the stock market.
Qiu Yanying, an analyst at TX Investment Consulting Co., said the move showed the government's desire to see a stable market and would help to restore investor confidence.
"Confidence in recovery is more important than fund injections," said Qiu. "After earlier panic and irrational selling amid a breakdown in confidence, it is hard for the market to return to normal."
"It was no longer a question of investment, but confidence," said Li Feng, an analyst at Galaxy Securities.
Qiu said the move was timely, an if it had been delayed, it could have triggered heavy losses and become less effective.
"Three thousand points is an important threshold for both regulator and investors and a sustained decline below the mark could be disastrous to investor confidence and trigger further selling."
The key Shanghai index dropped below 3,000 points only briefly on Tuesday, before bargain hunting pushed it to close 0.99 percent higher at 3,147.79.
"Further market declines can also have a huge negative impact on the economy," said Cao Fengqi, head of Peking University's finance and securities research center.
Analysts said a prolonged fall would hurt consumer spending, an increasingly important driver behind the country's economy with exports growth slowing on signs of a U.S. recession.
First-quarter losses by 346 mutual funds in China reached 647.5billion yuan (93 billion U.S. dollars), eight times the amount of the previous quarter, according to TX Investment Consulting.
The latest move followed a couple of recent support measures. The China Securities Regulatory Commission (CSRC) on Sunday ordered block trading for bulk sale of shares freed from the lock-up period and said Monday it had punished two fund managers for insider trading.
When more than 1 percent of a listed firm's total shares are sold within a month, the trade should be conducted through a separate block trading system operated by the Shanghai and Shenzhen exchanges, the CSRC said.
Li added the market was expected to see a sustained rebound in the second quarter on low valuations, an ease in liquidity pressure, and no lower than 30 percent growth for first-quarter corporate profits.

Slowdown, rising yuan put exporters in tough spot （2008/04/24）
       (Xinhua) -- It's a tough choice this year for exporters at the trade fair here: fewer orders or paper-thin profits.
The yuan is stronger and the world market is weaker, the result of the unfolding credit crisis. And that's had an impact on the number of buyers and orders for exporters who are attending the China Import and Export Fair in Guangzhou, capital of the southern Guangdong Province.
Figures from the fair show 128,155 foreign buyers in attendance, 5.8 percent fewer than the last spring fair. The number of U.S. purchasers decreased 23.3 percent and those from France and Germany were down 11.8 percent and 9.5 percent, respectively. "The decrease in U.S. and European Union buyers will cut our orders by about 30 percent," said a representative of the Shenzhen Lianchuang Company, which exports household appliances to the United States and Europe.
Other firms also felt the pinch, with few buyers visiting their booths and fewer signed contracts.
"Chinese goods are popular among U.S. customers, but we have to reduce our purchases because of decreasing U.S. demand," Ben Noonan, sourcing manager of Smartful Home, a U.S. textile importer, told Xinhua.
China's exporters have been complaining about losing orders as a result of the change in the value of the yuan, which has risen almost 4.6 percent against the U.S. dollar this year, making "Madein China" more expensive.
Customs statistics showed China's exports to the United States rose 5.4 percent year-on-year in the first quarter, a deceleration of 15 percentage points compared with the same 2007 period. Exports to the EU grew 24.2 percent, 10.3 percentage points lower.
Before the fair, there was talk that some Chinese exhibitors might hike prices and pass through the higher costs of raw materials and labor. But most found that they had to compete on prices to win any orders at all.
There were more buyers from new markets, including Africa and South America countries, but they were there for bargains, so price increases could scare them off, said Yu Hong, of China Minmetals Non-ferrous Metals Co..
If the pressure of rising costs cannot be passed on, Chinese manufacturers would be further pinched during the second ha